1. (SBU) Summary: Indonesia is taking concrete steps to
institutionalize its fight against corruption, laying the groundwork
for continued anti-corruption efforts regardless of who wins next
year's Parliamentary and Presidential elections. The Corruption
Eradication Commission, Attorney General's Office, Supreme Court,
and Indonesian National Police have all instituted tangible
anti-corruption reform agendas. These institutions are establishing
the architecture of better governance in Indonesia. High-level
corruption prosecutions seize headlines, but quiet institutional
reforms are increasing accountability and transparency in
governance. Improvements in combating corruption over the past year
form a broader reform trend in the past four years. End Summary.

2. (SBU) The Corruption Eradication Commission (KPK), an independent
government institution, is leading the campaign to combat corruption
in Indonesia. The KPK has expanded authority to conduct corruption
investigations and try cases in the specialized Anti-Corruption
Court. The KPK's seamless leadership transition last January
highlighted the growing maturity of the institution. With its five
new commissioners, the KPK has arrested and prosecuted several
high-level corruption suspects in 2008. Parliament has long been
considered one of the most corrupt, yet also untouchable,
institutions in Indonesia. That immunity ended in 2008. In six
separate scandals in 2008, the Corruption Eradication Commission
(KPK) has arrested six Members of Parliament - from both government
coalition and opposition parties.

3. (SBU) Making use of its new wiretapping capacity, the KPK also
caught a senior AG prosecutor, Urip Tri Gunawan, red-handed with a
$600,000 bribe in March. Within six months of the arrest, the
Anti-Corruption Court convicted and sentenced Urip to 20 years in
prison, as well as the businessperson who passed the bribe to five
years in prison. Another ongoing high-profile case involves Aulia
Pohon, a former central bank governor who is the father-in-law of
President Yudhoyono's son. Pohon has recently been named a suspect
in a central bank corruption case. The President has stated that
the KPK should not be subject to political influence and he has
honored that commitment.

4. (U) Increased personnel, a focus on capacity building, and
strategic partnerships help to explain the rising operational tempo
and growing institutional strength at the KPK. The KPK has nearly
doubled the number of investigators (111 now) and prosecutors (28
now) since 2005. The KPK's long-term strategy balances prosecution
and prevention. The KPK is on track to conduct more investigations
in 2008 than any previous year and is maintaining the prosecution
case load. Regarding prevention, the KPK is leading wider
government reform, including working with the Supreme Court to
better account for case fees and promote better governance and case
management with the support of the USAID-managed MCC Threshold
Program. The KPK has signed a number of cooperative MOUs with
international law enforcement and anti-corruption bodies, the most
recent one with the U.S. Federal Bureau of Investigation. These
agreements help codify and institutionalize the KPK's role in
Indonesia. One potential threat to the KPK is the pending
Anti-Corruption Court bill. If Parliament does not pass this bill
by December 2009, the KPK will be forced to prosecute its cases in
the normal court system, not the specialized Anti-Corruption Court.

5. (SBU) While the KPK is the headline independent government body
tasked to lead corruption, the Attorney General's Office is the
larger, more permanent institutional presence. The Attorney
General's Office and police handle over 95% of all corruption cases
nationwide whereas the KPK handles fewer than 5%. After being
rocked by an internal corruption scandal in March 2008, the Attorney
General's Office has made changes to strengthen its anti-corruption
efforts. The Attorney General appointed the widely respected senior
prosecutor Marwan Effendy to spearhead his anti-corruption efforts.
Effendy moved quickly to establish a 50-prosecutor anti-corruption
task force to investigate and prosecute high-level corruption cases.
The Task Force has already embarked on two dozen investigations and
prosecutions, including this month's arrest of the former Governor
of West Nusa Tenggara, the arrest of a Director General at the
Ministry of Law and Human Rights, and an investigation into
corruption at various Indonesian embassies.

6. (SBU) The Attorney General is also spreading this task force
concept nationwide. The AGO Anti-Corruption Task Force is
establishing mini task forces in each of the 31 Indonesian High
Prosecution offices, committing over 1,000 prosecutors to the fight
against corruption. These local anti-corruption task forces will be
formally announced on November 24, and will ultimately report to the
head of the national Anti-Corruption Task Force. Effendy has also
told us that he is working to shorten the approval process to bring
corruption cases to court, which prosecutors see as a bureaucratic
obstacle and political opportunity to hinder corruption
prosecutions.

7. (SBU) The Attorney General's Office launched a more wide-ranging
bureaucratic reform process in September 2008. Its plan includes a
comprehensive staffing assessment, followed by the development of
job evaluations, job descriptions, and new remuneration structures.
The AGO will present its findings to the Ministry for State Reform
and then the Ministry of Finance for approval in early 2009.

8. (SBU) The Supreme Court has made progress on three overarching
judicial sector reforms: enhancing court transparency; training
judges on a new Code of Conduct; and initiating bureaucratic reform.
In August 2007, the Supreme Court issued a Transparency Decree that
mandated that all Court decisions be posted online. The Court has
posted nearly 7,000 cases to date and is adding more cases daily.
Previously, Court decisions were not publicly available. The
Transparency Decree is a fundamental shift to improve accountability
of the Indonesian judicial system, according to legal reform
experts.
The Transparency Decree also requires the publishing of court budget
and fee information. To date, approximately 250 courts maintain
individual websites, with 200 providing access to budgetary and
financial information on their websites.

9. (SBU) The Supreme Court adopted a new Code of Conduct in 2006.
To date, the Court has trained over 2,000 judges in this new Code of
Conduct, which will now be used for new candidate judge training as

JAKARTA 00002146 003.2 OF 004

well. The Court has also begun to release disciplinary information
on judges who are found to be in violation of the Code as well as
other disciplinary matters. And in June 2008, the Court began
requiring senior court personnel to submit wealth reports to be
eligible for promotion.

10. (SBU) Judicial reforms are being institutionalized through
bureaucratic reform. The court has identified three additional
bureaucratic reforms: information technology enhancement; handling
of court fees; and human resources management. Information
technology initiatives are designed to improve public service
delivery and internal human resource capacity. New requirements on
court fees will standardize and publish all fees, a basic, yet
fundamental aspect of court transparency. Improvements in human
resources management, one of the most sensitive areas of reform, has
led to over 800 court personnel job descriptions and performance
standards being developed in the past year. A state-of-the-art
human resources database is also under development. These tools are
developing the groundwork for human resources reform, including
performance management.

11. (SBU) The Indonesian National Police has made internal reform a
central focus. In particular, they have dramatically increased
implementation of their Code of Conduct. During 2007, the police
investigated 19,459 police officers for violations of their Code of
Discipline and Code of Ethics, a 323% increase over 2006 discipline
cases. The dramatic increase is a result of a stronger nationwide
enforcement of internal codes of conduct, enforcement of internal
investigative procedures, defined investigative responsibilities of
criminal cases and internal code violations, centralizing of data
collection, and more accurate reporting. In addition, the police
overcame institutional fears of adverse publicity, publicizing
discipline statistics for the first time. The police is working to
institutionalize this progress by moving the Office of Professional
Security into their Inspector General's Office. This proposed move
will give ensure greater independence and resources to the Office of
Professional Security.

Other institutions joining the fight against corruption
--------------------------------------------- ---------

12. (SBU) The Ministry of Finance, led by the highly regarded Sri
Mulyani Indrawati, has initiated sweeping reforms within its own
ministry and with other government institutions. Within the
Ministry of Finance, Minister Indrawati transformed the Directorate
of Tax and Customs, firing hundreds of Customs officials and
streamlining the operation. Earlier this year, the KPK - in
coordination with Minister Indrawati - raided the Tax & Customs
office at Indonesia's largest port, exposing many corrupt practices
and cash bribes in desks. Outside of the Ministry of Finance,
Minister Indrawati has worked with the Supreme Court to implement
reform programs that reward the Court with higher compensation for
carrying out reforms.

13. (SBU) President Yudhoyono has also created the Office of
Government Procurement Policy to tackle the inefficiency and
problems within the government procurement system, a major source of
corruption. On the military front, President Yudhoyono appointed

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former KPK Commissioner Erry Hardjapamekas to lead the Defense
Department's 150-person business divestiture unit. Under
Hardjapamekas' leadership, the initiative to divest the military of
its businesses is moving forward after three years of inaction,
although long-term success will require significant Defense
Department budget increases to balance the loss of this major source
on off-budget revenue.

14. (SBU) Eradicating corruption remains a central pillar of
President Yudhoyono's overall governing strategy and political
agenda. And the institutionalization of policies, resources, and
organizational capacity means that anti-corruption reform will be a
legacy of President Yudhoyono, regardless of next year's election
results. The KPK is taking a more aggressive stance through its
increased personnel, record of success, and strong mandate. The
Attorney General's Office is initiating important reforms,
particularly the Anti-Corruption Task Force and bureaucratic
reforms. The Supreme Court's Transparency Decree is a fundamental
step to make the Indonesian legal system more accountable and open.
Police reform, particularly efforts to improve internal discipline,
targets another institutional source of corruption. More challenges
remain, but there is a growing strength and commitment to
anti-corruption reform in Indonesia, backed up by increasingly
capable institutions.

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